The Ultimate Guide To Hiring The Right CFO For Your Business

Chief Financial Officers (CFOs) are becoming increasingly vital to every function in medium and large businesses. Recently, they have come under the spotlight for helping businesses transition to new and more resilient ways of functioning (especially during the pandemic). They aid businesses in identifying ways to improve operations, raise productivity, and cut expenses. Appointing the proper Chief Financial Officer (CFO) is required for a company's financial health and long-term performance.

So, we have made a comprehensive guide to hiring a CFO to assist businesses in making an informed decision.

Skills and qualifications of a CFO

The first step in hiring a CFO for your business is understanding their job description and skill requirements. The duties of a chief financial officer are frequently adjusted to the needs of the company hiring them. Financial reporting, tax administration, cash flow optimization, financial planning, and other tasks fall under the purview of a company's chief financial officer (CFO). Moreover, today's CFO roles have grown beyond just finance. CFOs of the new era must be a master of all trades to help their business succeed and thrive in this competitive market.

While the job description for a CFO depends on the requirements of the firm, here are some skills that a CFO must possess:

Analytical Outlook

Analytics has become a big part of helping organizations with decision-making, driving the growth curve, and controlling instability. While business analytics empower organizations to scale rapidly, CFOs should know how to leverage these analytics to enhance operational value. Hence, a CFO needs to have an analytical mindset to help him/her use new-age reports and data to get the business closer to profitability.

Risk Assessment

Predicting and managing risk is one of the most crucial responsibilities on a CFO's plate. The Chief Financial Officer serves as the first line of defense in limiting and reversing the effects of any business crisis or threat. Naturally, experience with calculating risk and managing it is another key qualification to look for in a great CFO.

Innovation Focused

While this is not directly related to finance, an essential skill for new-age CFOs is their readiness to adapt to new technology. Advances in technology have ushered in a unique way of thinking and mapping a business strategy. Tech-savvy CFOs can adapt well to digital and business innovation and are likely to include innovations and digital analytical tools in their overall business strategy.

One way to test your CFO’s ability to adapt is to ask them how they intend to:

• Bring the best out of all the resources in hand

• Create a high-powered environment to usher in creativity

• Introduce modern solutions to minimize repetitive manual labor

Great communication and collaboration skills

It is crucial for a CFO that all departments understand what he/she wants them to do when conveying the operational strategy to them. CFOs should be clear, concise, and direct when communicating with company owners, leaders, and, most importantly, investors. C-suite executives need help to afford their CFO's message to get lost in translation among employees.

Strategic Planning

While a controller or managerial accountant can provide sound numbers, analysis, and financial reports, the CFO uses all of the above skills to advise the CEO and the board on the important strategic decisions the company should be making. A CFO with previous experience helping organizations with strategic planning will be able to provide better support on strategies.

Qualifications

A bachelor's degree in accounting, business, economics, or finance is usually held by many CFOs. Additionally, obtaining a master's degree in finance is typical, which broadens their understanding. Some may also possess professional qualifications like CA, CS, ACCA, or CPA, which can offer a competitive advantage in specific organizations. It's worth noting that this is not always a strict requirement and depends on the company's specific needs and industry standards.

Role of a CFO in an organization

As said earlier, the key duties that a CFO can take up purely depend on the organization’s size, its industry/domain, whether it’s a public or a private company, and most importantly, its immediate requirement.

In general, a CFOs role can be split into three buckets:

CONTROLLER, TREASURY, and STRATEGY & FORECASTING.

Controller

CFOs supervise the daily accounting and financial operations in their capacity as controllers. They are tasked with the generation of financial reports that offer comprehensive analysis of an organization's status, encompassing accounts payable, accounts receivable, inventory, and payroll.

Treasury 

As a treasurer, a CFO is responsible for the company's liquidity, debt, and assets. This includes monitoring any company's investments, whether physical assets, such as buildings and equipment or financial instruments.

Strategy & Forecasting 

Utilising both internal and external data and reports, strategy and forecasts provide guidance on matters like product development, market expansion, human capital management, mergers and acquisitions, and capital investments. Additionally, systematic planning and forecasting exercises such as FP&A and scenario planning are addressed there.

What type of CFO is right for your business?

Engagement with CFOs can come in many forms – Full-time (Permanent), Temporary (Interim), and Fractional. Another model commonly adopted these days is the Virtual CFO model. As more and more firms move to a virtual workplace, these designations are increasingly interchangeable. Let us now understand the meaning behind these roles so that you can decide which option is the right option for your business.

Full-Time CFOs

The company hires a full-time financial professional, the CFO, to watch over all aspects of the finance division. The CFO's tasks range from managing financial documents and laws to strategizing for the future. Generally, CFOs rely on the help of accounting and auditing teams to obtain, organize, and scrutinize monetary data. Full-time CFOs lead these accounting and other finance departments and can work with only one company during their tenure.

Fractional CFOs

A fractional CFO is a CFO expert who provides part-time, retainer, and contractual services. They provide CFO services to the companies on a part-time or contract basis. Their involvement may be restricted to a few days or hours, based on the company's requirements. It's important to keep in mind that fractional CFOs can serve several clients at once (unless you have an exclusive agreement inked).

Part-Time CFO

A part-time CFO (also known as Interim CFO) is not usually able to take on more than one client at a time. It is a kind of an Interim CFO service contracted when the full-time CFO is on a break or during a switchover as the personnel changes. Additionally, they can help the permanent CFO during periods of greater work intensity due to one-off events such as audits, mergers, etc.

Outsourced CFO/ Virtual CFO

Virtual CFOs are experienced CFOs who work on an hourly or fixed basis. These are common for companies that require financial governance but only on a part-time basis. They are most commonly seen working for startups or SMEs. In addition to saving you money, virtual CFOs give you access to seasoned experts who have worked with a number of startups and early-stage companies. They will be better equipped to spot opportunities and threats and can act in the best interest of your organization.

Another benefit when hiring virtual CFOs is that they usually have their support team of accountants, consultants, and planners. This is because most organizations they work with still need a full-fledged finance department to assist them in realizing their vision for the business.

Where to find a CFO?

Now that we know how important the role of a CFO is, the next question we must ask ourselves is – Where do you find a CFO? Fortunately, there are multiple ways you can shortlist CFO candidates. We have listed a few of these options below:

Hire an executive search firm

You save a great deal of time and work by doing this. You assign this task to a group of competent experts rather than spending your time screening applicants or getting in touch with people in your network. Executive search firms employ people who have extensive industry experience and may be familiar with qualified prospects. They will be able to scour the CFO community for the most qualified individual once they have your specific job requirements. 

CFO Bridge also provides executive search services for corporates. We leverage our industry networks and deep understanding of businesses to find the right CFO for you and even vet them to make sure they are fit to join your organization.

Learn more about CFO Bridge’s executive search services

Use your connections

It is possible for you to find a CFO independently, making use of your existing network. Try to contact anyone you think could be interested in the position. Someone who doesn't want the position might know someone who does.

Try networking online if you need a wide network of first-hand contacts or none of your contacts lead to a new hire. Websites like LinkedIn are a great way to post your requirements and find qualified candidates needing a job.

Keep an eye on industry news

You may improve your chances of hiring a talented chief financial officer by keeping up with industry news. There may be unemployed workers in the midst of a company's layoffs who are qualified for your open position.

Apart from this, Virtual CFO service is another way to meet your CFO requirements. In this model, a part-time CFO joins your organization virtually, helping you overcome financial hurdles by utilizing their skills. In addition, they can bring in their own group of financial professionals to help them with their needs, streamlining the process even more.

When a company's growth outpaces its ability to generate sufficient profits to hire a full-time chief financial officer (CFO), a virtual CFO can fill the void until the company reaches the next level of maturity.

When should you hire a CFO?

The optimal timing to hire a chief financial officer is difficult to determine. It is dependent upon the present state of your business. You should seriously consider hiring a Chief Financial Officer if your business is growing rapidly yet experiencing financial difficulties.

Indicators that your company may benefit from having a chief financial officer include the following:

Your company has experienced a lot of growth in a short time.

If your business has experienced a dramatic rise in income, your finances will be drastically altered. Likewise, when the company adds a large number of employees quickly, the budget must be adjusted to guarantee all staff receive their salaries. A CFO can guide your company through such transition periods and other challenges to prevent finances from getting out of control.

Your company is going public.

Financial preparation is essential before leaping an IPO. Your company's financial leader needs to know how to position the company for a successful initial public offering. A chief financial officer's knowledge and experience might be invaluable as a company takes this massive leap ahead.

You’re acquiring or merging with another company.

During acquisitions or mergers, a CFO's expertise is invaluable. They assess financial viability, conduct due diligence, and plan integration, minimizing risks and maximizing opportunities. Their insights on financial implications ensure strategic alignment. In this context, a CFO is indispensable for a smooth and financially sound transition.

Conclusion 

Finding the right CFO is like charting a course for your financial success. Beyond qualifications, a CFO is your strategic partner, steering your business through challenges and opportunities. Their analytical, risk management and communication skills are essential. Whether your business is rapidly growing, facing financial hurdles, going public, or pursuing acquisitions, a CFO's expertise is crucial. 

For expert CFO services tailored to your business needs, contact CFO Bridge today and secure your organization's financial future!